So, yes, GNOME and KDE didn't put a dent in Windows. But that wasn't the argument the anti-Linux folks were making. They were saying that as a process of producing software, open-source development was missing some magical property of the development practice - testing, professionalism, sustainability, security, etc. - that only closed-source proprietary development could provide. The reason Linux desktop failed to displace Windows was none of that: there's no (serious) argument that customers stayed with Windows because it had better stability or security. They stayed with Windows largely for compatibility and because it was free. The only missing feature was 100% compatibility with existing Windows software, which wasn't part of the claim.

As it happens I think that's actually directly analogous to the open access fight now. Universities stick with pricy journals not because those journals provide better typesetting or distribution (or science) but because those journals are the only way to get to existing papers. If Windows had never existed until today, nobody would switch to it; similarly, if Elsevier had never existed until today, nobody would start subscribing to them.